Putyourmoneytowork

When it comes to investing, I can't deny I'm quite an addict of analyzing different options and sorting them out, separating the good from the bad; However, what is a good investment?

I often hear people talking about good investments, that do not even seem to be an alternative for me when it comes... More to putting money to work. I do understand that there are many different investing vehicles, and that I chose multifamily buildings because of the things that I like to see when I purchase investment property, cash flow, upside opportunities such as below market rents, high vacancies or deferred maintenance just to name a few, economies of scale and of course, tax benefits.

All of this factors make a good investment for me, and this is probably why when someone approaches me with the idea of creating a hotel boutique franchise in the Caribbean, or buying a piece of land in South America to flip it to a multimillionaire in the US or Australia, or even buying a vineyard to make and sell my own wine. I think to myself, there's a lot of knowledge I have to acquire to make sure that this are good investments, most of the time it involves things I'm not able to understand and when it comes to investing, I like to keep it as simple as possible to understand where I'm putting my money, to understand the risks, the benefits, and to know when I'm making a decision, based on real factors, or based on speculative ideas that may pop up from now and then.

I'm assuming you, as me, have already decided to chose multifamily buildings as your investment vehicle, if not, this is not the article that will explain why you should or why you shouldn't, again, for me, it's my favorite vehicle because it has the things I like to have when investing, but there are definitely many vehicles out there that will get you financially free, and most importantly, at peace with your wealth and your income generation systems. I'm going to uncover how I find the best multifamily buildings to invest in for me and my clients.

1. Knowing my budget
First of all I make sure I know how much money I can invest. With that in mind I go out looking for properties that have a current cap rate of 8% or more.
I typically like financing my properties because that lets me leverage s lot of the money, usually giving me returns of 20% to 26% on the cash invested; however, I'm working and I've worked with clients that like to buy all cash to assume an even lower risk. For my age and risk tolerance I know I can handle the extra risk and sky rocket my cash on cash returns.

2. Farming for properties
At this point I have several ways I get leads.
I have associates that send me off-market inventories every week and I also work with a handful of brokers that know what I'm after and send me properties as soon as they list them and, in some cases, even before they list them.
I also do some direct mail campaigns to uncover owners that want to sell but haven't told anyone yet, so I approach them as a potential buyer willing to make a serious offer if they would consider selling and cashing out.

3. The properties I target initially
With my budget in mind I go out and look for properties that:
a. Are usually up to 15% to 30% above my budget because I know that I can get the listing price down sometimes as much as 40%
b. Are either turnkey and cashflowing like a charm (I know I have less room to negotiate this prices), or properties that have lots of improvements to be made and are typically managed by the owner.

4. Filtering the winners
To filter the winners I start running some numbers.
I usually like to calculate my expenses at 40 cents on de dollar (or 40%) of the gross operating income. Expenses ratios change from market to market but knowing my areas I know that properties should probably spend 35% if not 30% of the gross operating income in normal circumstances giving me some room for unexpected situations.

Once I have MY estimate for the NOI, which typically differs from the sellers. I send an offer to get the property cashflowing at 10 to 12% cap and wait for a counter or a confirmation.
I also like to use another valuation method figuring out the price per unit for comparable properties in the area and calculating the estimated value of my property on a per unit basis.
Knowing my market, and the price per unit of similar properties that sold or are for sale in the area, gives me more instruments to negotiate with the seller and get a better discount from the asking price.

5. Avoiding the over analysis trap
At this point, and when making an investment, there's a process involved where I gather information from the marketplace at the moment in time I want to make my investment. I know that every single day that I have my money in the bank I'm losing money, so I try to do this in a very organized and coordinated way so I don't get caught in over analyzing hundreds of deals, because that, leads to uncertainty and to having more days my money in the bank.
I typically do one round of leads and that is enough to filter them out to a winner. If I can't get something good out of the first round of leads, I wait a little bit longer and I go for a second round, but I know that this wait will cost me money.
I avoid the trap of over analyzing by knowing that perhaps there is a flawless deal out there, but if I don't find it after my first round of leads I'm ok with getting a very good deal and not the best. So no, I normally won't get the best of deals but I make a very good one, often.

6. Sending the offers and having all the information
And so it is. The information game.
Once I have my value estimates for every property I send offers to see what's the lowest possible price I can get each of the assets I pre-selected.
Then, accounting for repairs + 25% for unexpected situations I'm ready to make a choice.

Again, in the information game, you are only allowed to make choices out of the options you have, this is why I make sure to start from a very abundant amount of leads and start narrowing down until the point where I have various sellers that accepted my letters of intent and now I'm ready to decide which one I will go for.
Better returns from day one, more upside opportunities, less work to do after getting the property are all factors I put into consideration at the moment of purchase.

Again, the moment I make a decision is one, and this is why depending on how I'm feeling or what I'm particularly needing out my investments at that moment in time plays a big role in determining the exact option I choose as it happens with every one of my clients.

As a general rule, it's important to have all the important information prior to making a decision, and knowing that, there's only so much information about the available options on the market, that one can have, before one makes the leap.

I'm buying and selling apartment buildings all the time, from a job perspective it's my passion and something I enjoy. Looking to invest in you can send me an email to Show email or call me at (305) 851-7086

Fernando, I have a 272 unit apt. complex located in Tucson, AZ.. The owner are looking for someone to make a reasonable offer and they have to get there own financing . Would you be a Buyer for this property. Let me know. My e-mail is Show email

Sep 18, 2015

Fernando, I have a 272 unit apt. complex located in Tucson, AZ.. The owner are looking for someone to make a reasonable offer and they have to get there own financing . Would you be a Buyer for this property. Let me know. My e-mail is Show email

Sep 18, 2015

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